Big Tax Changes Coming

One of the most significant changes to South Africa's tax landscape will take place on 1 October 2012, when the Tax Administration Act 28 of 2011 come into effect. The Act will significantly alter the way SARS deals with taxpayers, and vice versa.

Somaya Khaki, project director for the SAICA Tax Suite, says that the Act has taken since 2005 to come into effect. It will be effective from 1 October except for certain sections that deal with interest. The exceptions relate to the principle of the levying of interest (that SARS may calculate interest on the daily balance owing and then compound it monthly), the periods in respect of which interest will be levied on provisional tax liabilities, and the rate of interest in respect of refunds of employees’ tax and provisional tax.

The Act aims to simplify the language used in previous acts, and to combine tax administration from all the tax acts into this one Act. The Act also adds certain provisions that are new to tax administration that were not previously in the other tax acts, such as a single registration and reference number across taxes. For example, currently taxpayers have a different number for income tax, PAYE and VAT; now they will have one, which will make it easier for SARS to administer.

However, there are still certain administrative provisions which remain in the specific tax acts to which they relate, so taxpayers and advisers need to first consider whether such a provision is covered in that particular tax act—and, if not, then the general rules in the Act will apply.

The Act is also a step closer to a self-assessment system. Also under the Act’s spotlight is the basic principle in our tax law that says a taxpayer must pay now and argue later. Previously, if there was a dispute between a taxpayer and SARS, the taxpayer had to pay his outstanding tax before the dispute was resolved. Now, under the new Act, collection steps by SARS are prohibited during consideration of suspension request and ten days after notice of denial or revocation of suspension, except if SARS has a reasonable belief that there is a risk of dissipation of assets.

SARS has also implemented an instalment payment agreement system, but in this case only senior SARS officials will be able to enter into such agreements in very specific circumstances. They will look at a taxpayer's circumstances, how likely it is that they will pay the taxes, whether they can pay at that point in time, and what is the likelihood of them paying in future.

Further, the Act sets out the requirements and timelines with regards to the issuing of tax clearance certificates, and provides clear guidelines to taxpayers and SARS officials administrating this function on when tax certificates can be withdrawn.

It also specifies the role of the Tax Ombud, which will protect taxpayers' rights and address service failure. The ombud will get involved where there are disputes over administrative issues with SARS and is expected to be appointed this year. To this effect, in July an advert appeared in the Mail & Guardian and on National Treasury's website. The ombud will be independent of SARS, and appointed by the Finance Minister.

The Act also provides timelines for when feedback on audit progress and findings need to be made, i.e. letter of findings to be issued within 21 days after completion of the audit.

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

MINIMUM REQUIREMENTS TO REGISTER

The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.